Docs, Hospitals Respond to CMS Retreat on Bundled Payments

Agency aims to cancel two models, scale back another

WASHINGTON -- A handful of Obama-era payment models -- including bundled payments for joint replacement and treatment of several other conditions -- will be eliminated or dramatically rolled back if the Centers for Medicare and Medicaid Services (CMS) implements a draft rule that was proposed on Tuesday.

"Changing the scope of these models allows CMS to test and evaluate improvements in care processes that will improve quality, reduce costs, and ease burdens on hospitals," said CMS Administrator Seema Verma in a press release.

"Stakeholders have asked for more input on the design of these models. These changes make this possible and give CMS maximum flexibility to test other episode-based models that will bring about innovation and provide better care for Medicare beneficiaries," she continued.

The proposed rule calls for eliminating the Episode Payment Models (EPS) and Cardiac Rehabilitation (CR) incentive payment model altogether and reducing the number of areas for which participation in the Comprehensive Care for Joint Replacement (CJR) model is mandatory. The latter bundles orthopedic services related to lower extremity joint replacements and is now in its second year.

For 33 out of 67 areas overall, and in low-volume and rural hospitals in all areas, participation in the CJR model will be voluntary.

Both the EPMs and CR models, which aimed to test the impact of bundling cardiac and orthopedic care and improving the quality of care were slated to begin next year. The EPMs cover three major conditions: myocardial infarction treatment, coronary artery bypass graft surgery, and surgical hip and femur fracture treatment.

"We are concerned that engaging in large mandatory episode payment model efforts at this time may impede our ability to engage providers, such as hospitals, in future voluntary efforts," CMS wrote in its draft rule.

"Similarly, we also believe that reducing the number of providers required to participate in the CJR model will allow us to continue to evaluate the effects of such a model while limiting the geographic reach of our current mandatory models."

Stakeholders Respond

These models were part of CMS's agenda to move healthcare from a volume to a value paradigm, said Richard Chazal, MD, immediate past president of the American College of Cardiology, in a phone call.

While the cardiac models were "far from perfect" they did include elements with the potential to improve patient care and lower costs, including removing limitations on rewarding physicians for helping patients through what was seen as "game-sharing."

The announcement will likely mitigate a lot of the anxiety due to the limited time physicians would have had to implement their models, he said.

Physicians are being challenged to "do a good job clinically" -- keeping up with medical information and new technology -- while changes in the "non-clinical environment" such as reimbursement add another layer of difficulty to their work, he said.

Yet Chazal also warned that if the problem of rising healthcare costs isn't settled in a thoughtful and timely way, physicians could witness "crisis management at a larger level" -- such as a return to across-the-board cuts in Medicare payments or a shift to single-payer healthcare.

And there's still a lot of concern over what happens next, he continued.

"Will [the models] be implemented a little bit later with more time to prepare or will something different be proposed?" Chazal wondered.

Anders Gilberg, senior vice president of Government Affairs for the Medical Group Management Association (MGMA) said he was neither surprised nor unhappy with the proposal.

Gilberg noted that when HHS Secretary Tom Price, MD, was a Georgia congressman, he was very critical of the mandatory nature of the proposals coming from the Center for Medicare and Medicaid Innovation (CMMI).

CMMI was envisioned as a lab to test new models, but by making hospitals "the guinea pigs" of an untested programs, it provoked a lot of negative responses.

"You can't create a program and force people to test it and then hold them accountable for things that they may or may not be able to control and then penalize them," he said.

Still, he didn't see the new draft rule as the death knell for bundled payment models.

For him, the announcement signals the agency will shift towards testing programs on a voluntary basis before fully rolling them out, Gilberg said.

How hospitals in the areas affected by the CJR rule change respond to the announcement in their comments will be something to watch, he added.

Docs, Hospital Groups Happy

The American Academy of Orthopaedic Surgeons cheered the decision.

"As we have said before, AAOS strongly supports the efforts of all stakeholders to develop payment models that incentivize care coordination and address rising healthcare costs," wrote AAOS President William Maloney, MD in a press release.

While "appropriate alternative payment models are a necessary component of the current Quality Payment Program," Maloney argued that "imposing mandatory models on surgeons and facilities that lack the familiarity, experience, or infrastructure required has serious unintended consequences. Reducing the geographic area for CJR while still leaving a voluntary option significantly remedies this issue."

Also applauding was the American Medical Association, which noted that the programs had left physicians and post-acute care providers largely on the sidelines.

"Bundled payment models should instead be constructed to give physicians leadership roles in designing the care delivery process and ensuring that it achieves good patient outcomes without unnecessary costs," an AMA statement noted.

The association also cautioned the agency to ensure adequate payments for higher-need patients, "so physicians, hospitals, and others are not placed at financial risk for factors they cannot control," the group noted.

"While we understand and support the agency's care improvement goals, we believe CMS made the right move to pull back the cardiac care episode payment models. Providers selected for the Comprehensive Care for Joint Replacement (CJR) demonstration are only just now adapting to these new payment and delivery approaches and need more time before facing another demonstration and the potential for mandatory participation in two models simultaneously," said Bruce Siegel, MD, MPH, president and CEO of America's Essential Hospitals, in a press release.

"This cancellation gives CMS an opportunity to evaluate current models and correct for unintended consequences before developing another voluntary or mandatory demonstration," continued Siegel.

CMS said it had contemplated a shift from mandatory to voluntary participation for EPMs and CR payment model, but ultimately chose to propose cutting the two models given the limited time for providers to implement changes before the anticipated Jan. 1, 2018, start date.

The agency also explained why it only modified and didn't cancel the CJR model, saying physicians have been implementing that program for more than 18 months, and have, in many situations, invested in redesigning their program.

In its draft rule, the agency also noted that it did not anticipate the cancellation of the EPMs and CR incentive payment models would cost providers anything.

However, changes to the CJR model would reduce the previously estimated savings from approximately $294 million to $204 million.

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